Why Bad Credit Loans Direct Lenders is Your Best Option
During your search for the right bad credit loans lender for you, you’ll take into account everything from interest rates to the terms and conditions. What so many people forget about are the different types of lenders on offer. Some are brokers, whereas others are direct lenders. On the face of it, they both seem like exactly the same thing. There’s a big difference between them, though. This article is going to help understanding the difference clearer as well as provide some other useful information.
What’s the Difference between the Two?
They are similar in many ways. Both of them deal in loans for people with poor credit records. And they run their operations in very much the same way. Where they differ is in where they get the money from.
The loan broker doesn’t issue any loans itself. It works alongside direct lenders as the middle man. Essentially, when you sign an agreement with a broker you’re signing an agreement with someone who doesn’t actually issue any loans personally. They have connections with direct lenders all over the United States.
The direct lender has the money and forms a direct agreement with the borrower. This has a number of advantages to it.
Application Processing Speed
Applications nearly always take longer when launched with a broker. Before the broker can approve a loan, they have to contact the lender to approve the loan. This takes a lot of time and effort. And it can slow the application down by many days. Dealing with a direct lender can get you a decision very quickly. It puts you out of your misery by giving you an answer quickly, as well as giving you the money if you need it quickly.
More Affordable for You
Brokers make their money by adding an extra fee into the loan, which translates to higher interest rates. It’s known as a broker’s fee and it helps them to boost their bottom lines, whilst they also gain a certain amount as an affiliate fee from the direct lenders themselves.
Dealing with a direct lender waives this fee. You can find yourself getting better rates if you decide to go down the direct lender route instead.
Peace of Mind
Many people find dealing with the lender themselves gives them peace of mind. A broker can disappear and leave you in trouble because you aren’t connected with the lender. With the direct lender option, you know where you stand and who you’re dealing with. To a lot of borrowers, this is just as important as getting better rates.
How to Choose Between the Two?
Determining whether one lender is a direct lender or a broker isn’t easy. Often, they don’t broadcast this on the front page. You have to look deep within their terms and conditions. The law dictates they have to state they’re not a lender in these conditions, otherwise it’s technically fraud.
Alternatively, you can find a website which lists all the direct lenders. A bad credit direct lenders a serious issue and more sites are starting to list the brokers and the lenders.